The role of social media when internationalising: A multiple case study of Swedish SMEs within the fashion industry

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The role of social media when

internationalising: A multiple case study of Swedish SMEs within the fashion

industry

Department of Business Administration International Business

Bachelor thesis Spring 2017 Authors: Louise von Braun, 930930 Filippa Sjöstrand, 930220

Tutor: Johan Jakobsson

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ACKNOWLEDGEMENTS

We would like to thank our supervisor Johan Jakobsson for supporting us throughout the research and writing process and for providing us with valuable insights.

Further, we would like to thank the three participating companies for sharing their personal experience and useful information.

Gothenburg 2017-06-02

Louise von Braun Filippa Sjöstrand

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Abstract

Title: The role of social media when internationalising: A multiple case study of Swedish SMEs within the fashion industry

Authors: Louise von Braun and Filippa Sjöstrand Supervisor: Johan Jakobsson

Background and problem: Along with globalisation, the world has observed a rapid internationalisation of firms, leading to emergence of small and medium-sized enterprises (SMEs). An industry consisting of some of the most internationalised companies is the fashion industry. The industry includes companies often considered as SMEs due to the common small number of employees. When SMEs internationalise, limitations of resources can hinder them from a successful internationalisation. However, a more extensive research regarding the role of social media in the internationalisation process of SMEs is needed due to the fact that including social media in the internationalisation strategy can lead to a more rapid internationalisation.

Purpose: The purpose of this thesis is to study Swedish SMEs within the fashion industry to achieve an understanding of how they use social media when internationalising.

Method: This thesis is based on a qualitative research method. The empirical data mainly consists of information retrieved from three Swedish SMEs active within the fashion

industry. Obtained information was linked to the theoretical framework in order to answer the research question.

Results and conclusions: The results of this thesis show that social media played a vital role in the internationalisation process of two of the participating companies, as it facilitated and increased the process, whereas the third company mainly used it to maintain and strengthen their international involvement.

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3 Abbreviations

B2B = Business to Business

ICT = Information and communication technologies MNC = Multinational corporations

SME = Small and medium-sized enterprise

Keywords

Internationalisation, small and medium-sized enterprises (SMEs), fashion industry, social media

List of Tables

Table 1: A summary of participating respondents

List of figures

Figure 1: The original Uppsala model Figure 2: The Uppsala model revisited

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1. Introduction

The introduction will present background information regarding globalisation,

internationalisation and the usage of social media within the fashion industry. Further on, a problem discussion regarding the topic is featured followed by a definition of the study’s purpose and research question. In the final section, a description of existing delimitations will be presented along with a review of the structure of the thesis.

1.1 Background

Globalisation has led to a world that is transforming from national economies being isolated with high barriers and restricted trade into one mutual market where perceived distance is shrinking and differences in culture and business systems are decreasing (Hill, 2010). Since the middle of the twentieth century, the world has observed a rapid internationalisation of firms (Olejnik & Swoboda, 2012) and the globalisation has impacted the increasing number of small and medium-sized enterprises (SMEs) pursuing business on the global market (Knight, 2000). Firms within the fashion industry are acknowledged as some of the most international companies (Alexander & Doherty, 2009), and the expansion of fashion retailers in Europe is greater than the observed foreign activities of retailers involved in other

industries (Doherty, 2000). According to Sproles (1981), fashion is defined as a trend to which consumers temporary adopt for a special event and time. In addition, fashion is said to be found in several aspects of society and culture, including clothing, painting, science etcetera (Yoganarasimhan, 2016). Furthermore, fashion is defined as the style of clothing and accessories worn at any given time (Steele & Major, 2017). In line with the latest mentioned definition we will in this thesis define fashion as the latest styles of clothing, including accessories. Thus, this is our definition of the fashion industry. In Sweden, fashion is further identified as one of the contributors to an increasing export (Volante, 2015) and in 2012, statistics pointed out that the Swedish fashion industry consisted of enterprises where 95 per cent had less than 10 employees (Volante, 2016).

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2 Regardless of the number of employees, social media plays an important part in the currently changing fashion industry (Hope, 2016). Social media is transforming the way companies communicate (Gonzalez, 2010) and has enabled the industry to attract customers, making them interact with the brands (Kim & Ko, 2012). Social media is furthermore revolutionizing the industry as the latest fashion is increasingly shared online (Park, Chiampaglia & Ferrara, 2016) and is a powerful tool in order to spread information and persuasion (Dicken, 2015).

Furthermore, the growth of digital technologies has impacted the marketing practice (Baines

& Chris, 2014) and created opportunities for companies to rapidly reach out to large groups of consumers in large distance (Dicken, 215). As people are getting more active on social media platforms and report purchasing via media websites, marketers are increasingly

investing in social networks, video-sharing sites, image-sharing sites, blogging platforms, and micro blogs, to increase the social capital of their brand (Baines & Fill, 2014). Since

everyone has the possibility to comment on, create and share information about a company, the organisations do no longer have excluded verification over how they are perceived in the marketplace (ibid.).

1.2 Problem discussion

The rapid internationalisation of firms (Olejnik & Swoboda, 2012) together with mentioned globalisation have created a new, intense business environment driving companies to act in an international context and leading to SMEs desiring to compete on the global marketplace (OECD, 2009). The digital revolution has increased the opportunity for international

expansion (Business Sweden, 2015) and facilitates boundless innovation across the world, enabling individuals, enterprises and organisations to direct communicate with partners, consumers, employees and other stakeholders (Government of Sweden, 2011). Digitalisation together with the use of social media is currently transforming the fashion industry and is especially important within the retail sector (Hagberg, Sundström & Egels-Zandén, 2015;

Hope, 2016). The usage of social media can further facilitate a faster internationalisation of SMEs (Hamill, 2013) and enable companies to market their products at a relatively low cost and more efficient than with more traditional communication tools (Kaplan & Haenlein, 2010).

However, SMEs suffer from liabilities of smallness (Aldrich and Auster, 1986) and face critical constraints such as a limitation of resources, lack of a requisite managerial

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3 understanding about internationalisation and an inability to contact potential international customers (OECD, 2009). These limitations can hinder companies from committing fully to a foreign market and constrain them from reaching a more advanced and engaged stage of internationalisation (Laufs & Schwens, 2014). As a result of the mentioned scarcity of resources, SMEs further become restricted from acquiring knowledge (Fletcher & Harris, 2012) that is considered to be a central determinant when internationalising (Åkerman, 2016).

An effective way of acquiring knowledge is through social media, enabling the gathering of information about e.g. customers and suppliers (Nguyen, Yu, Melewar & Chen, 2015).

However, even though social media creates opportunities in terms of e.g. knowledge

acquisition, marketing and raising awareness (Kietzmann, Hermkens, Mccarthy & Silvestre, 2011), many companies ignore or are unable to develop suitable strategies (ibid.).

An explanation to the difficulties of developing suitable strategies might be connected to a low degree of digital maturity. A report published by the Government of Sweden (2011) states that Sweden has a high use of information and communication technology (ICT), a great interest in new technologies and a good access to ICT infrastructure compared to other countries. Further, the report states that Swedish SMEs are active on all continents and different types of international websites (Business Sweden, 2015). However, when looking at international marketing and sales, research show that Swedish SMEs possess a low degree of digital maturity (ibid.), indicating possible difficulties when developing social media

strategies. Digital maturity is important when internationalising in regards of the economy where the enterprise is active and particularly important for SMEs, since they often produce their products and services on a regional level. In addition, the use of a multi-channel approach with cooperating analogue channels is limited (ibid.).

According to Hamill (2013) and Business Sweden (2015), social media can initiate the internationalisation process. However, SMEs face critical constraints such as a limitation of resources and do not possess the knowledge of how to benefit from social media when internationalising (Kietzmann et al., 2011). Furthermore, the low degree of digital maturity among Swedish SMEs might restrict firms to benefit from social media when striving to internationalise. As a result of the discussion presented above, there is a need to investigate the potential of social media in order for SMEs to overcome mentioned internal and external barriers that hinder SMEs to internationalise. In addition, although the internationalisation

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4 process of SMEs has been well researched (Hill, 2010; Olejnik & Swoboda, 2012; Schweizer, 2012), there is a lack of existing studies and developed theories regarding social media in relation to internationalisation, potentially due to its recent evolution (Okazaki & Taylor, 2013), enhancing the need for further research regarding the role of social media when internationalising.

1.3 Purpose of the study

The purpose of this thesis is to study Swedish SMEs within the fashion industry in order to conclude how they use social medias when internationalising.

1.4 Research question

How does an SME within the fashion industry make use of social media in its internationalisation process?

1.5 Delimitation of the study

Prior to conducting the research regarding how companies use social media when

internationalising, a delimitation was drawn to study only Swedish companies, leading to the possibility to draw more generalized conclusions concerning a specific geographical area.

1.6 Thesis structure

This thesis includes 6 larger chapters. The sections are described below.

1. Introduction - The introduction functions to introduce the topic for the reader and to present a problem discussion. Moreover, the purpose and research question of the thesis is featured, followed by a description of existing limitations.

2. Theoretical framework - The second chapter presents existing research relevant for the thesis. Selected theories are featured here, including research regarding the internationalisation process of SMEs such as the Uppsala model.

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5 3. Methodology - This chapter presents chosen methods used in the thesis. Moreover,

the section motivates the choice of methods and describes the gathering of information, how it was utilized and analysed.

4. Empirical material - This section primarily consists of information gathered through held qualitative interviews, presented in a coherent text. Moreover, the chapter

provides the reader with additional information regarding the fashion industry, social media and acquisition of knowledge through social media.

5. Analysis - The analysis consists of a discussion of the empirical findings gathered mainly through qualitative interviews and compared with theories presented in the theoretical framework.

6. Conclusion - This chapter presents the final conclusions drawn from the discussion in the analysis. The conclusion is based on information from the empirical material and theoretical framework.

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2. Theoretical framework

This chapter examines relevant theories mainly regarding internationalisation. Foremost, a

definition of internationalisation is presented. Further, factors motivating and impacting international involvement together with a presentation of the Uppsala model is featured.

Finally, the theoretical framework ends with presenting research regarding

internationalisation of SMEs and social media, followed by a description of existing research regarding knowledge acquisition from social media.

2.1 Internationalisation

According to Johanson and Vahlne (1977), internationalisation can be captured as a successive process of enterprises increasing their involvement on the international market.

Calof and Beamish (1995) describe internationalisation as a firm's adaptation of operations to international environments while Jones and Coviello (2005) define internationalisation as different patterns of behaviour, formed by an accumulation of evidence manifested as events at specific reference points in time. Because of the thesis’ focus on the process of

internationalisation, the definition used in this report corresponds to the one formulated by Johanson and Vahlne (1977).

2.1.1 Factors motivating and impacting international involvement

In order to maximize the value of a firm, increased profit is required and can be acquired through the internationalisation of a firm (Hill, 2010) and for some fashion retailers, an international presence is a necessity in order for them to improve their corporate brand and turnover (Moore & Burt, 2007). Although motivations for internationalisation cannot be regarded dominant over time or for a specific sector (ibid.), it exists opinions of drivers leading to an internationalisation of retailers (Evans, Bridson, Byrom & Medway, 2008).

Fashion retailers are recognized among the most successful international enterprises

(Hollander, 1970) and their international expansions are greater than within other segments of the retailing industry (Doherty, 2000). Alexander (1997) identifies mutually inclusive push and pull factors, functioning as incentives for expanding into foreign markets and illustrating reasons for why retailers are pulled towards a foreign market or pushed out of their domestic

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7 market. Factors concerning the political, economic, cultural, social and retail structural

market conditions, act as triggering factors for internationalisation. Identified push factors for foreign expansion are unstable political structure, poor economic conditions, a negative social environment, population stagnation and an unfamiliar culture climate. Given examples of pull factors are a stable political structure, good economic conditions and high market growth potential, developing markets, positive social environment, familiar culture reference points, innovative retail culture and niche opportunities (ibid.).

In addition to the pull factors, Root (1998) suggests three different rules when selecting a strategy for entering international markets, impacting companies’ global presence, the naive rule, the pragmatic rule and the strategy rule. When choosing the naive rule, the firm have the same entry strategy for all foreign markets. The pragmatic rule refers to a usage of a workable strategy for each market. Firms that use this entry mode usually start with low-risk entry modes. Lastly, the strategy rule, implying that alternative entry modes are compared and evaluated before a decision is made (ibid.).

2.1.2 The Uppsala model

Previously mentioned factors must be considered in the process of internationalisation, a process described by the Uppsala model. There are two versions of the model, the original from 1977 and the updated model from 2009, both considered in this thesis. As the aim of this report is to investigate the process of internationalisation of a firm, the Uppsala model is considered as a suitable framework as it explains a firm’s internationalisation as a process. A further description of the original and revised model is to be found below.

The idea of the of the original Uppsala model (Johanson and Vahlne, 1977) is that firms gradually increase their involvement in foreign markets. The model identifies two patterns.

The first one is the establishment chain, which describes the different stages in the

internationalisation process and indicates stretched commitment to the market due to greater experience and knowledge. The second pattern identified is psychic distance, i.e. factors associated with country-based diversities, indicating that firms enter markets that are close to their domestic and successively enter markets with greater psychical distance. The model explains this patterns as a result of the liability of foreignness, i.e. the inherent disadvantage that foreign companies are experiencing at foreign markets because of the fact that they are

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8 not native. Johanson and Vahlne (1977) describe internationalisation as a learning process that will help a firm to overcome the liability of foreignness and the fact that it is not native.

The more the firm is involved in the market, the faster the internationalisation (ibid.).

The original model consists of two aspects: state and change (See Figure 1), which explain the mechanisms of an internationalisation process (Johanson & Vahlne, 1977). The state and change mechanisms have great impact on each other. The model illustrates that the

knowledge acquired through market experience, influences decisions about the level of commitment and the activities, which will grow out of them. This results in a higher level of commitment to the market (ibid.). The basic assumption is that market knowledge and market commitment affect both commitment decisions and the way current activities are performed, which, in turn, affect market knowledge and commitment (Andersen, 1993).

Figure 1: The original Uppsala model (Johanson & Vahlne, 1977, pp. 26)

The original model (Figure 1) was revisited as changes in business practice and theoretical advances have been made since the original model in 1977 (Figure 2). The later version was presented in 2009 and focuses more on networks and relations (Johanson & Vahlne, 2009).

National boundaries and barriers are less important compared to a firm’s aim to strengthen its position in relevant networks when internationalising. The choice of market and entry mode is thus linked to existing networks due to its possibility to identify opportunities. According to the model, an internationalising firm will go to a foreign market in which it sees

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9 opportunities and the internationalisation process depends on a firm’s relations and network (ibid.). Opportunity has therefore been added into the box alongside with knowledge (Figure 2) as opportunities are considered to be the most important element for the body of

knowledge and drive the process forward. External opportunities and relationship networks can facilitate the process for a firm and have an impact on what foreign market the firm selects and what entry modes that are used (Johanson & Vahlne, 2009).

Further, the second state variable was changed from market commitment to network position.

The change is based on the assumption that the internationalisation is connected to and pursued within a network. Relationships are defined as different levels of knowledge, trust and commitment, and can be differently distributed among the members within the network.

Thus, this is an indication of how successful a firm’s internationalisation is promoted (Johanson & Vahlne, 2009).

The change aspect current activities are replaced by learning, trust and commitment building in order to clarify the intention, which is that a firm’s daily activities hopefully will lead to increased knowledge, trust and commitment. A high level of knowledge, trust and

commitment is argued to have a more efficient creation process as an outcome. This indicates that there is more than experiential learning involved, even if that is still considered as the most important type of learning, and this will strengthen the firm’s position within the network (Johanson & Vahlne, 2009).

The second change variable is relation commitment, which implies that the firm decides either to increase or decrease the level of commitment to a relationship. There are two types of decisions concerning commitment and relationship from a firm’s point of view. Firstly, to develop new business relationships and build bridges to new networks. Secondly, to protect or support a firm’s existing, strategic network (Johanson & Vahlne, 2009).

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10 Figure 2: The Uppsala model revisited (Johanson & Vahlne, 2009, pp. 1424)

The updated model also highlights the importance of insidership in networks, developed before the entry of a new market, sometimes even before the foundation of the firm. A business network means that exchanges in one relationship are linked to exchanges in another. Close and lasting business relationships result in accumulation of knowledge and building of trust. A firm that is well established in a relevant network is considered as an insider, however, a firm that is not active within a relevant network is considered as an outsider. As relationships and networks are essential for a firm’s learning and success, it is important to create relevant relationships, because otherwise, the firm will suffer from liability of outsidership when entering a foreign market, which will slow down the

internationalisation process. Lack of institutional knowledge (law, rules and language) and lack of business knowledge (a firm’s business environment) will create the liability of outsidership. When both trust and commitment are present at the same time, productivity, efficiency and effectiveness are estimated outcomes (Johanson & Vahlne, 2009).

2.1.3. Internationalisation of small and medium-sized enterprises (SMEs) As this thesis focuses on the internationalisation process of an SME, there is a need to clarify what is characteristic for an SME. The definition varies across countries but the most

common basis for definition is employment (Ayyagari, Beck & Demirguc-Kunt, 2007). The European Commission (2017) defines an SME as an enterprise with less than 250 employees

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11 and a turnover of 50 million euros or less, or a total balance sheet of 43 million euros or less.

A SME has further been defined as a company with less than 500 employees (USITC, 2010).

The internationalisation of small firms has increased and often takes place early in an SME’s life (Åkerman, 2016). Earlier research concerning internationalisation, including Johanson and Vahlne (2009), has mostly focused on the incremental internationalisation process where SMEs explore global markets through an increasing engagement as a greater amount of acquired knowledge and resources is gathered. However, later research has focused more on the type of internationalisation where small firms take part of the global market shortly after their inception, the so called born-global companies (Zhou, Wu & Luo, 2007).

Internationalisation is often a successful strategy in order for an SME to access existing benefits on the international market that previously mainly was accessed by larger companies (ibid.). Furthermore, a report produced by the ACCA (2010), describes evidence for that the smaller and wealthier a firm's home economy is, the more internationally focused the SMEs tend to be. Vaster participation in international activity tends to motivate human and

technological capital upgrading in order to improve productivity and to expand their business (OECD, 2007). In 2009, the main motivations for Swedish SMEs to internationalise was the opportunity to grow in other markets and thereby increase profit opportunities, managers’

previous experience on the global market, unique product or technology and a limited or stagnated domestic market (OECD, 2009).

Despite the mentioned strategy of SMEs using internationalisation, research highlights existing obstacles hindering smaller companies to succeed when competing on the global market (Frawley & Fahy, 2006). Furthermore, an overcoming of these limitations is an important aspect in the process of internationalisation (Agndal & Chetty, 2007). These obstacles come in forms of e.g. economies of large scale, scarce resources and the lack of access to financing (Frawley & Fahy, 2006; Beck et al., 2008). Further, the size of a firm has traditionally been an explanation for internationalisation and being a small sized enterprise with limited resources was earlier considered as an obstacle for a successful

internationalisation (Beck et al., 2008). However, more recent research argues that the

influence of the factor of size is decreasing (Mollá-Descals, Frasquet-Deltoro & Ruiz-Molina, 2011) and that small businesses now have a vaster presence on the global market (Dawson, Findlay & Sparks, 2008).

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12 Regarding the internationalisation process of SMEs within the fashion retailing industry it exists limited research concerning the choice of entry modes (Doherety, 2000). However, researchers claim that retailers, in the start-up, tend to operate in markets close to their home market and are likely to apply entry methods that they used in the domestic market

(Alexander & Doherty, 2009). The internationalisation of SMEs does not exclusively involve exports and imports, they are also involved in complex international relationships (European Commission, 2010). Joint ventures, franchise and concession are entry modes identified as suitable for SMEs with reduced resources. In particular, franchising is becoming more popular because it does not require invested equity (Mollá-Descals et al., 2011). Multiple entry modes may be used for different operations and various modes affect the firms in terms of control, degree of investment risk, resource commitment and financial returns (Hill, 2010).

Culture has an impact on fashion retailers’ business environment, hence also impacts the choice of entry mode. Cultural proximity encourages expansion from one market into another (Alexander & Doherty, 2009).

2.1.4 Internationalisation and Social media

As social media facilitates companies to improve their international presence and to reach out to potential consumers all over the world, an increasing number of enterprises include it in their international strategy (European Commission, 2014). It is difficult to evaluate the direct effect on revenues that is generated by social media presence (Pick, 2016), but it can enable an internationalisation of any business towards almost any market (European Commission, 2014). However, social media is only a useful instrument if the consumers have access to social media, so as to Internet. This implicates that not all international markets can be targeted with social media marketing because of some geographical regions’ poor Internet infrastructure (Internet Society, 2017). Additionally, demographic factors influence the potential of social media, one being that social medias are particularly used by younger generations (Hutchinson, 2016; Gardner 2014; Pick, 2016). This indicates that depending on what type of product or service offered, social media could be limited as a targeting tool. The type of social media should be adapted to the purpose of the campaign, as different social medias have different potential depending on which is the targeting group (Gardner, 2014).

For example, Facebook has good potential for raising awareness, for increasing visibility, and distributing information, while Instagram is a better platform for interaction with consumers

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13 (Leibowitz, 2017). Also, the potential of a specific social media can differ in different

geographical regions (Baines & Fill, 2014).

Apart from an access to international markets, social media provides competitive advantages, including raising awareness, indirect awareness, promotions, co creations, facilitate real-time consumers support, gain customer and market insights, enhance customers’ loyalty, spending and referrals, predict real-world outcomes and intranet (internal network) (European

Commission, 2014).

2.2 Knowledge acquisition from social media

Social media has transformed the way of accessing and disseminating knowledge (Kaplan &

Haenlein, 2010). Knowledge acquisition from social media can be regarded as experience accumulation, which influences firms’ capability to identify opportunities, errors, and threats (Zhang & Li, 2010). When internationalising, knowledge of the targeted market together with processual knowledge, i.e. the understanding of how to internationalise, is required (Fletcher

& Harris, 2012) and seen as a key to obtain competitive advantages (Barney, 1991). Market knowledge can provide competitive advantages for companies making them agile and observant of market opportunities and creating an understanding of customers (Nguyen, Melewar & Chen, 2015). SMEs often have limited information and resources to help them make informed and effective decisions to manage uncertainty (Udomkit & Schreier, 2017).

Social media can decrease this limitation, enabling companies to grow (Nguyen, Melewar &

Chen, 2015).

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3. Methodology

The methodology presents a description and explanation of the included methods starting

with a presentation of the research approach. Further the chapter presents the choice of study, collection of data and the analysis process. The section ends with a description of the quality of the study, the ethical position and existing limitations.

3.1 Research approach

In order to answer the established research question, the theoretical framework is mainly based on existing research regarding internationalisation of firms (e.g. Johanson & Vahlne, 2009) and studies regarding the increasing internationalisation of SMEs (e.g. Mollá-Descals et al., 2011; OECD, 2009). This thesis’ focus on SMEs makes the latter important as the internationalisation process at times differ depending on size and access to resources (Beck et al., 2008).

To reach an informed understanding of the phenomenon described in the research question, a qualitative study was employed, interviewing three SMEs active within the Swedish fashion industry. Qualitative research enables a deeper understanding of complex facts and situations (Guercini, 2014; Jacobsen, Sandin & Hellström, 2002). Furthermore, international business is an area where qualitative research is rare but has the possibility to develop the field (Doz, 2011). The choice of conducting this type research method is a flexible way of gathering information (Bryman & Bell, 2013) and has, in this thesis, allowed for the respondents to freely answer the questions without time to reconstruct their responses. According to Trots (2010), this method also gives the respondent room for reflection, reactions and personal reasoning.

Due to the choice to conduct a qualitative study, there is a necessity to critically revise the received answers (Frejes & Thornberg, 2015). In order to obtain a deeper understanding of the empirical data and research area and for the thesis to function as theory developing, a heuristic approach is used in order to interpret, understand and mediate the collected, qualitative data (Westlund, 2015).

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15 In addition to a qualitative study, this thesis takes on an abductive approach, in order for the research to result in a well-reasoned connection between theory and empirical data, leading to well-constructed conclusions (Patel & Davidson, 2011). A theoretical framework was prior to held interviews developed but modified in order to fulfil the purpose of the study.

3.2 Multiple Case study

In order to produce a theory building thesis where the answers can implicate a generalisation of how social media is used within the fashion industry when internationalising, the study takes on a multiple-case study approach. A case study is an empirical inquiry, which provides an in-depth description and analysis of a bounded system of a case within a context of reality (Dyer & Wilkins, 1991). Yin (2014) argues that all case studies strive to explain why

decisions were made, in what way and with what result. Hence, for the reason that this report is studying a process of internationalisation, a cases study is suitable. In addition, to obtain more personal reflections and to increase the credibility of the findings, the thesis contains multiple cases, studying three different Swedish SMEs active within the fashion industry.

According to Yin (2003), a multiple-case study further results in a more robust research.

3.2.1 Sampling

Saunders, Lewis, and Thornhill (2012) describe that a limitation of available data is suitable for researchers in order to transform a big amount of data more manageable. In order to sample obtained data, several sampling techniques were employed, all of them suitable for case study projects (Marschan-Piekkari & Welch, 2011). The selective sampling was utilised in order to find companies that suited the chosen criteria of only selecting samples from Swedish SMEs conducting business within the fashion industry. Furthermore, a convenience sampling method was employed, referring to a type of sampling easy accessible for the researcher. This technique was used due to the difficulties in finding companies suiting the research’s delimitations and willingness to participate in the study. In order to find

appropriate companies, personal contacts were used leading to an acquaintance with a

number of firms. After several requested interviews being declined, three companies accepted our desire to conduct interviews, leading to three companies being part of the study.

Moreover, a snowball sampling was used, contributing to a participation of respondents due to the fact that personal contacts led to other contacts resulting in an interview of one of the

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16 responding companies (ibid.). The companies have all requested to stay anonymous.

However, a description of the studied firms can be found in the empirical material.

Furthermore, the used interview questions can be found in the appendix.

3.3 The Research process

The research process was initiated with a theoretical evaluation defining keywords such as internationalisation process, SMEs, fashion industry and social media, that constitute the foundation of this study. This period of research provided a deeper understanding for the internationalisation process of SMEs, the development of social media and the fashion industry. It was also from this period that the research question emerged. This was followed by a period of qualitative collection of primary data, consisting of interviews with different firms considered relevant for our study, SMEs within the fashion industry that

internationalised through social media. When analysing the interviews and the collected theoretical data we searched for possibilities to develop and extend the originally chosen theories, and an explanation to the increasing use of social media when internationalising.

After held interviews, we went back to the theoretical framework adding and removing theories considered necessary in order to be relevant and fulfil the purpose of the study. The fact that changes were made in the theoretical framework throughout the research process indicates that this study takes on an abductive approach, which involves deciding which inferences that are most likely to be drawn from made observations, in order to come up with a suggestion for a theoretical structure (Patel & Davidson, 2011; Bournemouth University, 2009). The final part of the research process consisted of a rewriting of chapters with a focus on analysing the collected data, aiming to achieve a greater understanding of social media’s impact on the internationalisation process.

3.4 Data Collection

This study involves both primary data and secondary data. Primary data was gathered from three firms and secondary data was further collected in order to acquire a deeper

understanding of the respondents’ answers. Presented below is a further explanation of the data collection.

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17 3.4.1 Primary data

The main body of the collected empirical data in this thesis is based on primary data. In line with the choice to conduct a qualitative study and in order to receive a deeper understanding of the firm’s internationalisation process through social media, qualitative interviews were conducted with representatives from adequate enterprises. In order to assure an informative and relevant outcome of held interviews, conducted in line with the research question, an interview guide was constructed prior to the held interviews. Therefore, a form of subject scheme was compiled, this in accordance with Bryman and Bell (2014). General subjects were sent to the respondents in advance for them to prepare without impacting their answers.

Qualitative interviews often have a low degree of structure (Patel & Davidson, 2011), and as suggested by Yin (2014), semi-structured interviews were held and conducted both in person and through Skype. The desired outcome was to accentuate the respondent’s view of the asked questions, which distinguish semi-structured interviews (Yin, 2009) and therefore was a suitable choice. Furthermore, a semi-structured interview enables the interviewer to acquire a more profound understanding of the respondents (ibid.). Used interview questions can be found in the appendix.

In total, three respondents from three different companies were interviewed. The respondents were all involved in the represented SMEs’ work regarding marketing and using social media, why they were considered as well informed and reliable. All interviews were recorded and transcribed in order to conduct a detailed analysis. According to Bryman and Bell (2014), a recording and transliteration facilitates a deeper analysis and allows for the interviewer to repeatedly listen to the interview. The interviews lasted between 31 and 46 minutes and the questions intended to motivate open, flexible answers based on the thesis’ research question and problem discussion. The location of the execution was chosen with the ambition of an undisturbed and safe environment for the respondent. A summary of the respondents is presented below in Table 1.

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18 Denomination Commodity Role in

company

Form of interview

Date Duration

Company A Sunglasses Founder Face-to-face 2017-04-19 39 min Company B Online

clothing and accessories

Founder Telephone 2017-05-04 46 min

Company C Sportswear Marketing manager

Face-to-face 2017-05-12 31 min

Table 1: A summary of participating respondents (Authors’ own).

3.4.2 Secondary data

Secondary data was collected from former existing research regarding the role of social media in the internationalisation process of SMEs within the fashion industry in order to acquire information about how SMEs earlier have reached the international market and what role social media has played. Therefore, data regarding social media and the fashion industry was gathered and reviewed but also in order to analyse primary data in the analysis.

The secondary data was collected in the beginning of the research process in order to get an understanding of the topic. The books, articles, web journals and other documents used have mainly been retrieved from Google Scholar and electronic databases such as Gothenburg University Library (GUNDA) and LIBRIS provided through the School of Business, Economics and Law at the University of Gothenburg. In order to find adequate data, keywords such as internationalisation theory, internationalisation of SMEs, social media, fashion industry, internationalisation of the retail industry, knowledge acquisition was used.

3.5 Method for analysing empirical material

In order to examine the empirical findings in relation to the theoretical material, the analysis was initiated with the interviews being transliterated in order to provide a truthful view of received responds, in accordance with Bryman and Bell (2014) stating that transliteration

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19 facilitates a deeper analysis and allows for the interviewer to repeatedly listen to the

interview. Later, an examination of the written parts of the report was made in order to link relevant empirical information to the theoretical material, finding patterns and ideas of how to structure the analysis. Further, the findings were organized through a template method, due to the strive to carry out a well-structured analysis containing a complete review of important information. A template analysis method includes an organised way of conducting an analysis, including e.g. pattern matching (ibid.). In this thesis, the template analysis method was employed using chosen headlines featured in the analysis as a structure when sorting the gathered empirical data and theoretical framework, i.e. the role of social media when

internationalising, factors motivating and impacting international involvement, different role of actors, overcoming barriers with social media, strategies social media and knowledge acquisition from social media. This resulted in a well-structured analysis connecting relevant facts with relevant theories leading to the obtained information being applied in the best possible way. However, headlines and categories of information were frequently relabelled during the course of the writing in order for the analysis to correspond to the research question and fulfil the purpose of the study.

3.6 Quality of the study

In order to ensure that the study is able to answer the research question (Guba, 1981) we will examine the trustworthiness and quality of this qualitative study in terms of dependability, credibility, confirmability, and transferability (Shenton, 2004).

3.6.1 Dependability

Since the researcher is responsible for the data collection and there is no fixed structure for such an approach, it is difficult for other investigators to replicate a qualitative research (Guba, 1981). Despite mentioned difficulties, this study strives to function as theory developing, resulting in a possible use for other researchers and leading to a contribution within the researched area of how SMEs within the fashion industry make use of social media in their internationalisation process. In order to function as theory developing, a method conducting qualitative research was chosen. Moreover, in order for other researchers to come to similar findings, the research process needs to go in line with the one constructed in this thesis. Hence, a detailed description of the research process is displayed throughout the report. However, the choice of using qualitative research means that there is a risk that the

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20 qualitative researcher observes what lays in his/her interest (Bryman & Bell, 2011).

Qualitative researchers defend this criticism as they absorb attractions and situations, which they believe are important (ibid.). In order to increase the dependability of the study we will objectively analyse the information gathered from the interviews so as to display findings that correspond to the reality. Hence, these aspects will not be our biggest concerns.

3.6.2 Credibility

Credibility measures how well the findings correspond to the reality (Shenton, 2004), how the research concretely was planned, and how it was carried out (Bryman & Bell, 2011). In order to produce a thesis with high credibility, several measures were taken throughout the study. Firstly, information was collected from a vast number of sources, including both primary data and secondary data. The acquired information was later on compared, leading to a deeper understanding of the subject. This can, according to Collis and Hussey (2013), help to improve the credibility. Secondly, the writing of this thesis was conducted with

impartiality due to a non-existing connection between the writers and the interviewed companies, leading to a genuine reflection of the firms’ answers used in this thesis.

Furthermore, the choice of respondents was made after an assurance that they had a broad insight of the company’s work regarding the subject. Another means to increase credibility is triangulation (Shenton, 2004). Triangulation involves different methods for gathering and analysing data (ibid.). In this study, triangulation is employed due to the usage of a wide range of data sources when collecting theoretical material and secondary data (ibid.).

Moreover, the primary data is composed by different informants, providing a narrative comparison regarding social media’s impact on the internationalisation of Swedish SMEs within the fashion industry (ibid.). The information collected from different sources provided a background to the primary data, and was helpful in order to verify details supplied by the informants.

3.6.3 Confirmability

Confirmability involves a measurement of how researchers avoid biases (Shenton, 2004), highlighting the importance of a truthful reflection of the information gathered from the findings of the responding firms, and that influences from the characteristics and preferences of the researcher are not involved. In order to avoid biases, a form of triangulation was applied in the thesis, resulting in a conduction of a multiple case study, gathering primary

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21 data from several sources i.e. three Swedish companies within the fashion industry.

According to Shenton (2004) this is a way of triangulating via data sources that verifies gathered information. Triangulation can counteract biases through combining two or more sources of data (Joslin & Müller, 2016) and the combination of primary data from different informants, and secondary data, in the empirical part of this study, limits this type of bias.

3.6.4 Transferability

Transferability concerns generalizability and to what extent the findings of the study can be applied in other situations (Shenton, 2004). Since this is a qualitative study, with the findings based on gathered empirical data from three different companies, it is difficult to argue to what extent the conclusions can be applicable to other situations and research (ibid.).

However, if practitioners believe that their situation is similar to a study, they may relate the findings to their own situation (ibid.). Due to the desire to function as theory developing, a detailed introduction of the research process and chosen companies is therefore featured in the empirical data, leading to practitioners being able to easily comprehend the relevance of the study in relation to their research and facilitate them if desiring to apply a similar

research, drawing generalizable conclusions. According to Yin (2003) qualitative research is generalizable and further describes two different forms that a qualitative study might enclose, analytic generalisation and statistical generalisation. This study cannot demonstrate a

statistical generalisation, as it does not draw inferences from data to a population. However, by using a qualitative multiple-case study an analytical generalisation is possible in order to provide a contextualized understanding of personal experience through the research of particular cases (ibid.). Furthermore, Shenton (2004) states that transferability not should be rejected due a small amount of studied cases (ibid.).

3.7 Ethical considerations

When conducting a qualitative study using interviews, it is necessary to acknowledge the importance of ethical principles (Bryman & Bell, 2014). The ethical considerations normally include voluntariness, integrity, confidentiality and anonymity for the people involved in the study (ibid.). In this thesis, all respondents participated voluntarily without offered rewards and were well informed about the purpose of the study before their involvement. The respondents were informed that anonymity and confidentiality was a given possibility and that the recorded information only was gathered for the purpose of the thesis. Moreover, the

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22 participants were given the opportunity to withdraw from the interview, take part of the completed study and refuse to answer sensible questions if desired.

3.8 Limitations

The study has a number of limitations related to the collection of empirical data. The thesis aims to investigate Swedish SMEs within the fashion industry but due to difficulties in

finding companies willing to attend interviews, the collected empirical primary data is mainly retrieved from companies situated in the Southwestern parts of Sweden. To study companies from a specific part of a larger area might be considered as a limitation due to the possibility that the usage of social media might differ depending on the geographical context where the company is active. Furthermore, the choice to study smaller firms contributes to that

conclusions of firms in different industries and of larger size cannot be drawn without consideration. Moreover, the results ought to be reviewed with the number of performed interviews kept in mind.

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4. Empirical material

The empirical material begins with displaying empirical data gathered through primary data and secondary data. The first part describes the secondary data. The presented data features information regarding the fashion industry and social media in order to develop a deeper understanding of the main topics portrayed in the research question. Further, the chapter features information gathered through held interviews with three companies beginning concerning a small introduction of the firms.

4.1 Fashion industry

According to Sproles (1981), fashion is a trend to which consumers temporary adopt for a special event and time. Fashion is also said to be found in several aspects of society and culture, including clothing, painting, science etcetera (Yoganarasimhan, 2016). Furthermore, fashion is defined as the style of clothing and accessories worn at any given time (Steele &

Major, 2017). In line with the latest mentioned definition we will in this thesis define fashion as the latest styles of clothing, including accessories. Hence, this is our definition of what forms part of the fashion industry.

In Sweden, fashion is identified as a contributor to an increasing Swedish export (Volante, 2015) and in 2015, the revenue of the Swedish fashion industry was 305 million Swedish krona. This number was an increase with 15,3 per cent from the year before (ibid.) and between 2011 and 2016 the export of Swedish fashion nearly doubled (Volante, 2016).

During the last 20 years, the fashion industry has been through a significant change

(Bhardwaj & Fairhurst, 2010). The development of a faster form of delivery, an increase of existing number of fashion seasons and a rapidly changing consumer demand has led to a need for fashion retailers to speed up their business in order to capitalize on the latest fashion (ibid.). Furthermore, the rise of fast fashion has led to some retailers desiring shorter lead times and retailers have started to create the demand instead of supplying when noticing a demand, this in order to increase their turnover (Bhardwaj, Eickman & Runyan, 2011).

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4.2 Social media

Social media vastly impacts the development of the fashion industry (Hope, 2016; Park, Chiampaglia & Ferrara, 2016). As a further development of the world-wide-web, which was introduced in 1990s, used as a static publishing and retail channel, it was revolutionary in its ability to disseminate information content (Baines & Fill, 2014). At the time, it was a one- way mass communication model with focus on the technology rather than consumers’ needs, that means that it pushed out information to the consumers (ibid.), however today, it is increasingly consumer driven which means that active consumers can co-create offerings, dialogues, and control the content of a brand’s messages, marketing activities and offerings (ibid.).

However, what is included under the term social media is not evident (Kaplan & Haenlein, 2010). Nationalencyklopedin (nd) refers to it as communication channels that allow users to communicate with each other and that consists of a content produced by the consumers.

Kaplan and Haenlein (2010) further develop this definition by adding that it is a form of media that is publicly available. Social media is also said to be an instrument used to

communicate with external stakeholders such as consumers and vendors (Leonardi, Huysman

& Steinfield, 2013). Furthermore, Nationalencyklopedin (nd) state that it often has the formation of a web service where companies own the servers and that is a mixture of social interaction, user-generated content and technology. Nationalencyklopedin (nd) further state that it can be used for e.g. socializing, marketing, organisation, news reporting, cultural exchange, and entertainment. Today, the majority of people use social media and is involved in social media activities such as reading and commenting entries in blogs (Kimmerle, Moskaliuk, Oeberst & Cress, 2015).

The development of the world-wide-web and e-commerce have made it easier for SMEs to overcome some of the existing internationalisation barriers (Mathews and Healy, 2007). The continuing development of policies as well as acceptance of electronic signatures may further strengthen the positive effect that Internet and e-commerce have had on the

internationalisation of SMEs. Additionally, because of Internet, the relationship between numerous of barriers and the size of the SME has weakened (European Commission, 2010).

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4.3 Empirical data;; introducing the companies

The empirical data consists of collected information from three different companies. Due to their request to stay anonymous, the companies will be referred to as Company A, B and C. A short introduction of the firms will follow bellow and used interview questions are featured in the appendix.

Company A

Company A was founded in Gothenburg in 2015, active within the fashion retail industry, selling sunglasses. The company was founded by 4 persons that as of today are the only employees of the firm. Today, the company's products are available in physical stores in Germany and Austria but most of their sales are made online to practically all markets. The interviewed representative from Company A is one of the co-founders, in charge of all divisions of the company. Company A is active on: Instagram and Facebook.

Company B

Company B is active selling women's clothing and accessories online. The firm was founded in Halmstad in 2011 and the number of employees has never been more than 10. In 2016, a larger company within the same industry acquired Company B. The interviewed

representative is one of the co-founders but have since the acquisition not been involved in the firm. Received information, if not explicitly stated otherwise, concerns the characteristics of Company B before the acquisition. Company B is active on: Instagram and Facebook.

Company C

Company C was founded in Borås in 1977 and is part of a group. The company is active within the fashion retail industry, producing functional sports apparel and in 2016, the firm employed 92 persons. The brand is active on 39 markets through different retailers and is accessible online from 7 different countries. The firm is decentralised, leading to the

marketing and usage of social media being controlled separately from different markets. The respondent works as a marketing manager and has been a part of the company for

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26 approximately three years. Company C is active on: Instagram, Facebook, Twitter, Pinterest and LinkedIn.

4.3.1 Social media;; useful when internationalising

According to the European Commission (2014), firms use social media in order to improve their international presence, and in the case of all participating companies, the choice to incorporate social media in their internationalisation process was given. Moreover, an early internationalisation was according to Company A an active choice whereas Company B saw the opportunity because of the usage of social media. Both Company A and B utilized social media in their B2C communication from the start-up, thinking that it was essential in order to raise awareness and further attract more international customers. As a result of the usage, both companies were able to attract customers from international markets, increasing their sales. According to the companies, both of the platforms were necessary in the process of internationalisation, creating awareness of their brands. In addition to higher sales, Company B argues that an internationalisation without the help from social media would have been more complex. According to the firm, “It would have been much more difficult and expensive, especially without Instagram.” (Founder, Company B).

The respondent from Company A consider the firm as born global, i.e. a type of firm that takes part of the global market shortly after their inception, (Zhou, Wu & Luo, 2007).

Although the majority of sales being derived from Gothenburg, Company A started their internationalisation exporting to countries demanding their products, ordering them online.

The strive was from the beginning to enter the global market using e-commerce and when all the founders moved abroad, Company A saw the opportunity to sell their products through retailers in both Austria and Germany. Despite the possibility to export to almost every country, the biggest part of Company A’s sales comes from Gothenburg, which according to the firm can be described as a result of the large existing competition among companies active within e-commerce. Moreover, the company’s involvement in selling sunglasses is said to be a factor increasing local sales. Company A experiences sunglasses as a product that people like to try before purchasing, leading to an easier spread in areas where the products are visible.

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27 Company B started focusing on the Swedish market with a website only available in Sweden.

The company used influencers, i.e. a person who is able to impact others, for marketing their products through their social media channels. Thanks to the influencers’ international

following base, Company B’s number of followers increased and a strive to explore international markets emerged. In addition, the focus on neighbouring markets increased, leading to Norway and Denmark being targeted and initiated the development of a website available in Swedish, Danish, Norwegian and English. According to the founder of Company B, “Internationalisation was a natural step. With the increasing number of foreign followers on social media we felt forced to open the channels for them.

Because of a founding prior to the digital revolution, Company C internationalised before the incorporation of social media. The majority of markets were entered before incorporating social media in their marketing but markets such as Japan and Indonesia was entered after initiating the usage. Company C is currently not looking for new markets to enter but wishes to expand already existing, a desire that according to the company might be enabled through social media. When internationalising, Norway has been a country with big focus, which as mentioned by Company C is a given market because of its resemblance with the Swedish market. The respondent further explains that the firm found it easier to transfer their image into markets that are similar in terms of styles and interests as Sweden.

4.3.1.1 Social networks;; an important asset when internationalising

All participating companies highlight the importance of their social networks in their

internationalisation process, emphasising it as a crucial asset for SMEs when striving to reach a global scale. Company A’s process of going global was an active choice but partly also connected to the founders’ personal networks. The founders are originally from Sweden but lived, during parts of their education, in cities such as New York, Cologne and Vienna, allowing them an easier access to those markets due to the possibilities to create a personal network because of their presence and knowledge of the native culture and language. Thus, this was the reason as to why Company A was able to sell their products through retailers in both Austria and Germany. Company A further states that social media has enabled the company to connect with persons offering to market their products.

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28 As stated by Company A, Company B agrees with the importance of being part of a social network. Attending social events helped the firm initiate a contact with influencers, allowing them to market the firm’s products through their social media channels. Because of the influencers’ international following base, Company B’s number of followers and sales increased. Furthermore, Company B’s social network initiated the desired acquisition of the company.

Company C also highlights the important role that a social network has played when entering markets. According to the respondent, the firm’s social network facilitated the company’s international expansion. This can be exemplified with the expansion to the Norwegian market, an expansion possible mainly due to the internal networks within the group. The company further states that social media has led to new and more amplified networks with e.g. suppliers and distributors. Despite the possibilities to a broader network, the marketing manager of Company C emphasises the difficulties in separating potential important contacts from unreliable “fortune hunters”.

Hence, all participating companies state the importance for an SME to obtain a social network and mention that they have utilized their personal contacts in the process of

internationalisation. Furthermore, two out of three companies highlight that social media can function as a provider of these contacts.

4.3.2 Social media strategies when internationalising

In the case of Company A and B, being active on social media was a strategic choice established before the firms were founded, and according to both firms, social media was a given choice in order to raise awareness on a regional, national and international level. In the case of Company C, the firm was already established on the international market when social media emerged, but states that the relatively new phenomenon of social media is valuable in the regards of strengthening the company’s relation to their international and national markets. This assumption is further strengthened by the fact that Company C is about to develop a new social media strategy together with one of their suppliers.

The role of social media when internationalising: A multiple case study of Swedish SMEs within the fashion industry